Federal Register / Vol. 86, No. 135 / Monday, July 19, 2021 / Notices 38147 

33 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3An ‘‘Order Attribute’’ is a set of variable 

instructions that may be associated with an Order 

to further define how it will behave with respect to 

pricing, execution, and/or posting to the Exchange 

Book when submitted to the System. See Equity 1, 

Section 1(b)(7). 

4The RASH (Routing and Special Handling) 

Order entry protocol is a proprietary protocol that 

allows members to enter Orders, cancel existing 

Orders and receive executions. RASH allows 

participants to use advanced functionality, 

including discretion, random reserve, pegging and 

routing. See http://nasdaqtrader.com/content/ 

technicalsupport/specifications/TradingProducts/ 

rash_sb.pdf. 

5The OUCH Order entry protocol is a proprietary 

protocol that allows subscribers to quickly enter 

orders into the System and receive executions. 

OUCH accepts limit Orders from members, and if 

there are matching Orders, they will execute. Nonmatching Orders are added to the Limit Order Book, 

a database of available limit Orders, where they are 

matched in price-time priority. OUCH only 

provides a method for members to send Orders and 

receive status updates on those Orders. See https:// 

www.nasdaqtrader.com/Trader.aspx?id=OUCH. 

6The Exchange designed the OUCH protocol to 

enable members to enter Orders quickly into the 

System. As such, the Exchange developed OUCH 

with simplicity in mind, and it therefore lacks more 

complex order handling capabilities. By contrast, 

the Exchange specifically designed RASH to 

support advanced functionality, including 

discretion, random reserve, pegging and routing. 

Once the System upgrades occur, then the Exchange 

intends to propose further changes to its Rules to 

permit participants to utilize OUCH, in addition to 

RASH, to enter order types that require advanced 

functionality. 

7The Exchange notes that its sister exchange, The 

Nasdaq Stock Market, LLC (‘‘Nasdaq’’), has already 

filed similar proposed rule changes with the 

Commission. See Securities Exchange Act Release 

No. 34–92180 (June 15, 2021), 86 FR 33420 (June 

24, 2021) (SR–NASDAQ–2021–044). 

8See Securities Exchange Act Release No. 34– 

91263 (March 5, 2021), 86 FR 13950 (March 11, 

2021) (SR–Phlx–2021–11); Securities Exchange Act 

Release No. 34–90558 (December 3, 2020), 85 FR 

79231 (December 9, 2020) (SR–Phlx–2020–51). 

9See Rule 3301B(d). 

10See Rule 3301B(l). 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of DTC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–DTC– 

2021–013 and should be submitted on 

or before August 9, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.33

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15187 Filed 7–16–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92377; File No. SR–Phlx– 

2021–40] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Equity 4, 

Rules 3301A and 3301B 

July 13, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on July 2, 

2021, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Equity 4, Rule 3301B, as described 

further below. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Presently, the Exchange is making 

functional enhancements and 

improvements to specific Order 

Attributes 3 that are currently only 

available via the RASH Order entry 

protocol.4 Specifically, the Exchange 

will be upgrading the logic and 

implementation of these Order Types 

and Order Attributes so that the features 

are more streamlined across the 

Exchange Systems and order entry 

protocols, and will enable the Exchange 

to process these Orders more quickly 

and efficiently. Additionally, this 

System upgrade will pave the way for 

the Exchange to enhance the OUCH 

Order entry protocol 5 so that 

Participants may enter such Order 

Types and Order Attributes via OUCH, 

in addition to the RASH Order entry 

protocols.6 The Exchange plans to 

implement its enhancement of the 

OUCH protocol sequentially, by Order 

Type and Order Attribute.7

To support and prepare for these 

upgrades and enhancements, the 

Exchange recently submitted two rule 

filings to the Commission that amended 

its rules pertaining to, among other 

things, Market Maker Peg Orders and 

Orders with Reserve Size.8 The 

Exchange now proposes to further 

amend its Rules governing Order 

Attributes, at Rule 3301B. In particular, 

the Exchange proposes to adjust the 

current functionality of the Pegging 9

and Trade Now Attributes,10 as 

described below, so that they align with 

how the System, once upgraded, will 

handle these Order Attributes going 

forward. The Exchange also proposes to 

amend the Midpoint Peg Post-Only 

Order Type, at Rule 3301A, to 

accommodate changes to the Trade Now 

Attribute. 


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11See Rule 3301B(d) (defining ‘‘Primary Pegging’’ 

as pegging with reference to the inside quotation on 

the same side of the market, ‘‘Market Pegging’’ as 

pegging with reference to the inside quotation on 

the opposite side of the market, and ‘‘Midpoint 

Pegging’’ as pegging with reference to the midpoint 

between the inside bid and the inside offer). 12This change is applicable to Primary, Market 

and Midpoint Pegging Orders entered via RASH/ 

FIX; OUCH/FLITE Midpoint Pegging behavior is not 

affected by this change. The Exchange also proposes 

to amend existing language in this provision which 

states that ‘‘if the Inside Bid and Inside Offer are 

crossed or if there is no Inside Bid and/or Inside 

Offer, the Order will not be accepted.’’ The 

proposed amendment would specify that this 

language applies only to Orders with Midpoint 

Pegging entered through OUCH or FLITE. The 

proposed changes to pegged orders entered through 

RASH or FIX will allow the Exchange to handle the 

Order more consistent with the customer intended 

instruction, and are necessary to facilitate 

forthcoming System enhancements. 

13Meanwhile, the Exchange proposes to amend 

the Rule to state that if a Pegged Order is assigned 

a Routing Order Attribute, and a permissible 

pegging price is not available upon entry, then the 

Order will continue to be rejected. The Exchange 

proposes to retain existing practice for Pegged 

Orders with Routing Order Attributes because the 

Exchange is not yet prepared to make similar 

changes to such Orders, although it contemplates 

doing so in the near future. 

14When a Pegged Order lacks a pegging price or 

a permissible pegging price, the System will not 

wait indefinitely for a pegging price or a 

permissible pegging price to become available. 

Instead, the System will cancel the Order if no 

permissible pegging price becomes available within 

one second after Order entry or after the Order was 

removed due to the lack of a permissible pegging 

price and no longer available on the Book. The 

Exchange may, in the exercise of its discretion, 

modify the length of this maximum time period by 

posting advance notice of the applicable new time 

period on its website. 

15 In this paragraph of Rule 3301B(d), the 

Exchange again proposes to state that it will 

continue to reject a Pegged Order entered through 

RASH or FIX when a permissible pegging price is 

unavailable, if the Pegged Order is assigned a 

Routing Order Attribute. The Exchange will 

continue to accept certain Market and Primary 

Pegged Orders at their limit price where they have 

Routing Order Attributes. The Exchange proposes to 

retain existing practice for Pegged Orders with 

Routing Order Attributes because the Exchange is 

not yet prepared to make similar changes to such 

Orders, although it contemplates doing so in the 

near future. 

16An example of a scenario where pegging would 

lead to a price at which an Order cannot be posted 

is as follows. Assume that the NBBO is $0.0002 × 

$0.0003. A Primary Pegged Order to buy is entered 

with a passive offset amount of $0.0003. This would 

result in the Order being made unavailable by the 

Exchange as ¥$0.0001 is not a permissible price. 

Currently, the Exchange accepts such Orders at its 

limit price, and will post the Orders to the 

Exchange Book in accordance with the parameters 

that apply to the underlying Order Type. 

17The Exchange proposes to apply a similar time 

limitation to the holding period prescribed above. 

Similarly, for an Order with Midpoint Pegging, if 

the Inside Bid and Inside Offer become crossed, or 

there is no Inside Bid or Inside Offer, the System 

will cancel the Order if no permissible price 

becomes available within one second after the 

Order was removed and no longer available on the 

Exchange Book (the Exchange may, in the exercise 

of its discretion modify the length of this one 

second time period by posting advance notice of the 

applicable time period on its website). For an Order 

with Midpoint Pegging with a Routing Attribute, 

the new one second time period will be applicable. 

18Additionally, the Exchange proposes to replace 

the word ‘‘would’’ with ‘‘could’’ in this provision, 

so as to clarify that collars apply in circumstances 

in which Pegged Orders might execute, but do not 

necessarily do so. An example of a circumstance in 

which such Orders do not execute is as follows. 

Assume that the NBBO is $10.00 × $10.01. A Market 

Pegged Order to buy posts at $10.01. The NBBO 

then updates to $10.00 × $11.00. Because re-pricing 

and posting the Market Pegged Order would result 

in the Order being available on the Book and 

executable at $11.00 (outside of the collars), the 

Order will be canceled. 

19See Securities Exchange Act Release No. 34– 

92180 (June 15, 2021), 86 FR 33420 (June 24, 2021) 

(SR–NASDAQ–2021–044). The Exchange notes that 

prior to SR–NASDAQ–2021–044, Midpoint Trade 

Now was a distinct Order Attribute in the Nasdaq 

rulebook, first introduced in 2018. See Securities 

Exchange Act Release No. 34–84621 (November 19, 

2018), 83 FR 60514 (November 26, 2018) (SR– 

Changes to Pegging Order Attribute 

First, the Exchange proposes to 

amend Rule 3301B(d), which governs 

the Pegging Order Attribute. The 

Exchange offers three types of Pegging: 

Primary Pegging, Market Pegging, and 

Midpoint Pegging.11 The Rule presently 

provides that if, at the time of entry, 

there is no price to which a Pegged 

Order can be pegged, the Order will be 

rejected, provided, however, that a 

Displayed Order that has Market 

Pegging, or an Order with a Non-Display 

Attribute that has Primary Pegging or 

Market Pegging, will be accepted at its 

limit price. The Exchange proposes to 

replace this text by stating that if, at the 

time of entry, there is no price to which 

a Pegged Order, that has not been 

assigned a Routing Order Attribute, can 

be pegged or pegging would lead to a 

price at which the Order cannot be 

posted, then the Order will not be 

immediately available on the Exchange 

Book and will be entered once there is 

a permissible price.12 The Exchange 

proposes this change so as to enhance 

the manner in which the Exchange 

presently handles Pegged Orders in this 

scenario. Rather than reject such Orders 

outright, and require customers to 

continuously reenter the Orders 

thereafter until a pegging price emerges, 

which may cost them queue priority, the 

Exchange believes that it would be more 

efficient and customer-friendly to 

simply hold a Pegged Order until a 

permissible pegging price emerges.13

A similar rationale applies to the 

Exchange’s proposal to cease accepting 

certain Market or Primary Pegged 

Orders at their limit prices if no pegging 

price is available. Because participants 

presumably prefer for their orders to 

post at the pegging price, the Exchange 

believes that participants would prefer 

for the Exchange to hold such orders 

until a permissible pegging price 

emerges, rather than post the orders at 

their limit prices.14 15

The Exchange proposes similar 

changes to the paragraph of Rule 

3301B(d) that applies to Pegged Orders 

entered through RASH or FIX that 

posted to the Exchange Book. The text 

presently provides that if the price to 

which an Order is pegged is not 

available, the Order will be rejected. 

The Exchange proposes instead to state 

that if the price to which an Order is 

pegged becomes unavailable or pegging 

would lead to a price at which the Order 

cannot be posted,16 then the Exchange 

will remove the Order from the 

Exchange Book and re-enter it once 

there is a permissible price. Again, the 

Exchange proposes this change to 

enhance and make the System more 

efficient by providing for the Exchange 

to re-post the Pegged Orders rather than 

rejecting them when there is no 

permissible pegging price and requiring 

participants to re-enter them once a 

valid price becomes available.17 The 

Exchange notes that the proposed 

change will not apply to Pegged Orders 

with Routing Attributes assigned to 

them; the existing Rule functionality 

will continue to apply to those Orders. 

Rule 3301B(d) also subjects Pegging 

Orders to collars, meaning that any 

portion of a Pegging Order that would 18

execute, either on the Exchange or when 

routed to another market center, at a 

price of more than $0.25 or 5 percent 

worse than the NBBO at the time when 

the order reaches the System, whichever 

is greater, will be cancelled. Although 

the Rule states that it applies this collar 

to Orders with Primary and Market 

Pegging, the Exchange has always 

intended for the collar to also apply to 

Orders with Midpoint Pegging, and in 

practice, it does so. The failure of the 

Rule to reflect the application of the 

collar to Midpoint Pegged Orders was 

an unintended omission. The Exchange 

now proposes to revise Rule 3301B(d) to 

correct this omission. 

Changes to the Trade Now Order 

Attribute 

Additionally, the Exchange proposes 

to amend its rules governing the Trade 

Now Attribute, at Rule 3301B(l). 

Pursuant to Rule 3301B(l), Trade Now is 

an Order Attribute that allows a resting 

Order that becomes locked by an 

incoming Displayed Order to execute 

against a locking or crossing Order as a 

liquidity taker. The Exchange proposes 

to amend Trade Now in several respects. 

First, the Exchange proposes to 

incorporate so-called ‘‘Midpoint Trade 

Now’’ functionality into the Trade Now 

Attribute, similar what Nasdaq did in a 

recent corresponding rule filing.19 This 


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NASDAQ–2018–090). SR–NASDAQ–2021–044 

incorporated Midpoint Trade Now into Trade Now. 

20An example of a crossing scenario is as follows. 

A non-displayed Order to buy rests on the Book at 

$0.9995. Thereafter, a Post Only Order to sell is 

entered at $0.9994, which would post on the Book 

and display at $0.9994, thereby crossing the nondisplayed Order as the price improvement 

requirements were not met. 

21This proposed change in functionality for 

OUCH and FLITE is enabled by the migration of 

Trade Now to the Exchange’s matching System. 

22The Exchange proposes to add language to Rule 

3301B(l) to state that Trade Now allows a resting 

Order that becomes locked ‘‘or crossed, as 

applicable at its non-displayed price’’ by the 

‘‘posted price’’ of an incoming Displayed Order to 

execute against a locking or crossing Order(s) 

automatically. The Exchange proposes to add the 

phrase ‘‘or crossed, as applicable,’’ for 

completeness. It also proposes to add the phrases 

‘‘at its non-displayed price’’ and ‘‘posted price’’ for 

purposes of clarity. They merely communicate that 

the incoming Displayed Order or Midpoint Peg 

Post-Only Order first posts to the Exchange Book, 

thereby locking or crossing the resting Order at its 

non-displayed price. 

23 15 U.S.C. 78f(b). 

24 15 U.S.C. 78f(b)(5). 

25The Exchange notes that as part of this 

proposed change, if there is no Pegging Price upon 

entry for a Displayed Order that has Market 

Pegging, or an Order with a Non-Display Attribute 

that has Primary Pegging or Market Pegging, then 

it will no longer accept such Orders at their limit 

price. The Exchange believes that this proposed 

change is consistent with the Act because it better 

aligns with customer intentions for Pegged Orders 

to post at a Pegging Price. That is, the Exchange 

believes that participants prefer for Pegged Orders 

to be entered at a Pegging Price, rather than its 

entered limit price, even if that means that the 

Order must wait for a Pegging Price to become 

available. As discussed above, the Exchange does 

not propose this change for Pegged Orders with 

Routing Attributes. 

26 It is also consistent with the Act to limit the 

time period for which the Exchange will hold, 

without canceling, Pegged Orders for which there 

is no pegging price or permissible pegging price 

because the Exchange does not believe that 

customers would want the Exchange to hold their 

orders indefinitely. Moreover, holding such orders 

indefinitely would encumber the Exchange’s 

System. The Exchange believes that a one second 

holding period for such orders is long enough to 

provide the above-stated efficiencies for 

participants, but not too long as to encumber them. 

However, the Exchange believes that it is reasonable 

to reserve discretion to alter the holding period, 

from time to time, should it determine that doing 

so better meets the needs of customers or its System 

resources. 

27Additionally, the Exchange believes that it is 

consistent with the Act to replace the word 

‘‘would’’ with ‘‘could’’ in this provision, because 

doing so would clarify that collars apply in 

circumstances in which Pegged Orders might 

execute, but do not necessarily do so. See supra, 

n.19. 

functionality would allow a resting 

Order that becomes locked at its nondisplayed price by an incoming 

Midpoint Peg Post-Only Order to 

execute against a locking or crossing 

Order as a liquidity taker. This 

functionality will allow market 

participants to have their Orders 

executed as a taker of liquidity should 

that Order become locked at its nondisplayed price by a contra-side 

incoming Midpoint Peg Post-Only 

Order. This functionality will therefore 

promote an efficient and orderly market 

by allowing Orders in this scenario to 

execute and resolve a locked market. 

Similarly, allowing a subsequent Order 

to execute against a locking Midpoint 

Peg Post-Only Order if the resting Order 

that is locked by the Midpoint Peg PostOnly Order has not enabled the Trade 

Now functionality will also promote an 

efficient and orderly market by allowing 

the incoming Order in that scenario to 

execute and resolve an instance where 

Orders with a non-displayed price on 

both the buy and sell side of the market 

are priced equally but not executing 

against each other. 

Next, the Exchange proposes to 

amend Rule 3301B(l) by streamlining 

and simplifying the instructions that 

participants must enter to address the 

handling of their orders in various 

locking or crossing scenarios.20

Specifically, rather than require a 

participant to manually send a Trade 

Now instruction whenever an Order 

entered through OUCH or FLITE 

becomes locked, the proposed amended 

Rule will allow for a participant to 

enable Trade Now functionality on a 

port-level basis for all Order entry 

protocols and for all Order Types that 

support Trade Now, as well as on an 

order-by-order basis, for the NonDisplayed Order Type, when entered 

through OUCH or FLITE.21 For Orders 

entered through RASH or FIX, Trade 

Now will be available on an order-byorder basis for all Order Types that 

support Trade Now. The proposal will 

not extend Trade Now functionality to 

new Order Types.22 However, the 

Exchange notes that it proposes 

conforming changes to the Midpoint Peg 

Post-Only Order Type, at Rule 3301A, 

which already includes Trade Now, to 

accommodate the adoption of Midpoint 

Trade Now functionality. 

The Exchange intends to implement 

the foregoing changes during the Third 

Quarter of 2021. The Exchange will 

issue an Equity Trader Alert at least 7 

days in advance of implementing the 

changes. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,23 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,24

in particular, in that it is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system, and, in general to protect 

investors and the public interest. 

The Exchange believes that its 

proposed amendments to the Pegging 

Order Attribute, at Rule 3301B(d), are 

consistent with the Act. The proposals 

to eliminate the functionality that 

provides for the System to reject certain 

Pegged Orders that lack a permissible 

pegging price, or to post the Orders at 

their limit price, are consistent with the 

Act because they eliminate unwarranted 

inefficiencies that arise when 

participants must repeatedly re-enter 

rejected Pegged Orders until a 

permissible price becomes available.25 26

It is also consistent with the Act to 

maintain the existing practice in the 

Rule of rejecting a Pegged Order without 

a permissible pegging price where the 

Order has been assigned a Routing 

Attribute. The Exchange is not yet 

prepared to hold such Orders in the 

same way that it proposes to do so for 

Pegged Orders without Routing 

Attributes, although it contemplates 

doing so in the near future. 

Moreover, the proposal to amend Rule 

3301B(d) to state expressly that 

Midpoint Pegging Orders are subject to 

price collars, like Orders with Primary 

and Market Pegging, will correct an 

unintended omission and ensure that 

the Rule is consistent with existing 

Exchange practice and with customer 

expectations. The application of these 

collars will prevent Pegged Orders from 

having prices that deviate too far away 

from where the security was trading 

when the Order was first entered.27

The Exchange’s proposals to amend 

its rules governing the Trade Now 

Attribute, at Rule 3301B(l), is consistent 

with the Act. First, it is consistent with 

the Act to add to Trade Now so-called 

‘‘Midpoint Trade Now’’ functionality, 

which presently exists on Nasdaq. This 

functionality will allow market 

participants to have their Orders 

executed as a taker of liquidity should 

that Order become locked at its nondisplayed price by a contra-side 

Midpoint Peg Post-Only Order. This 

functionality will therefore promote an 

efficient and orderly market by allowing 

Orders in this scenario to execute and 

resolve a locked market. Similarly, 

allowing a subsequent Order to execute 

against a locking Midpoint Peg PostOnly Order if the resting Order that is 

locked by the Midpoint Peg Post-Only 

Order has not enabled the Trade Now 

functionality will also promote an 

efficient and orderly market by allowing 

the incoming Order in that scenario to 

execute and resolve an instance where 

Orders with a non-displayed price on 

both the buy and sell side of the market 


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28As noted above, for Orders entered through 

RASH or FIX, Trade Now will be available on an 

order-by-order basis for all Order Types that 

support Trade Now. 

29 15 U.S.C. 78s(b)(3)(A). 

30 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

are priced equally but not executing 

against each other. 

The proposed amendments to Trade 

Now will also streamline and simplify 

the instructions that participants must 

enter to address the handling of their 

orders in various locking or crossing 

scenarios. Rather than require a 

participant to manually send a Trade 

Now instruction whenever an Order 

entered through OUCH or FLITE 

becomes locked, the proposed amended 

Rule will allow for a participant to 

enable Trade Now functionality on a 

port-level basis for all Order entry 

protocols and for all Order Types that 

support Trade Now, as well as on an 

order-by-order basis, for the NonDisplayed Order Type, when entered 

through OUCH and FLITE.28

Furthermore, it is consistent with the 

Act to add language to Rule 3301B(l) to 

state that Trade Now allows a resting 

Order that becomes locked ‘‘or crossed, 

as applicable, at its non-displayed 

price’’ by the ‘‘posted price’’ of an 

incoming Displayed Order to execute 

against a locking or crossing Order(s) 

automatically. The Exchange proposes 

to add the phrase ‘‘or crossed, as 

applicable,’’ for completeness. The 

Exchange also proposes to add the 

phrases ‘‘at its non-displayed price’’ and 

[sic] for purposes of clarity. They merely 

communicate that the incoming 

Displayed Order or Midpoint Peg PostOnly Order first posts to the Exchange 

Book, thereby locking or crossing the 

resting Order at its non-displayed price. 

Finally, the Exchange believes that it 

is consistent with the Act to make 

conforming changes to the Midpoint Peg 

Post-Only Order Type, at Rule 3301A, 

which already includes Trade Now, to 

accommodate the adoption of Midpoint 

Trade Now functionality. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. As a general 

principle, the proposed changes are 

reflective of the significant competition 

among exchanges and non-exchange 

venues for order flow. In this regard, 

proposed changes that facilitate 

enhancements to the Exchange’s System 

and order entry protocols as well as 

those that amend and clarify the 

Exchange’s Rules regarding its Order 

Attributes, are pro-competitive because 

they bolster the efficiency, integrity, and 

overall attractiveness of the Exchange in 

an absolute sense and relative to its 

peers. 

Moreover, none of the proposed 

changes will unduly burden intramarket competition among various 

Exchange participants. Participants will 

experience no competitive impact from 

its proposals to hold (up to one second), 

rather than reject (or accept at their limit 

price), Pegging Orders (other than those 

with Routing Attributes) in 

circumstances in which no permissible 

pegging price is available, as these 

proposals will merely eliminate 

unwarranted inefficiencies that ensue 

from the System requiring participants 

to repeatedly re-enter Pegged Orders 

until a price becomes available, or the 

System posting Pegged Orders at their 

limit prices, if there is no pegging price. 

Moreover, the proposal to amend Rule 

3301B(d) to state expressly that 

Midpoint Pegging Orders are subject to 

price collars, like Orders with Primary 

and Market Pegging, will have no 

competitive impact as the proposal is 

consistent with existing Exchange 

practice and with customer 

expectations. 

The Exchange’s proposals to amend 

its rules governing Trade Now will have 

no adverse competitive impact on 

participants. The proposed addition of 

Midpoint Trade Now functionality will 

expand the Exchange’s capabilities 

relative to competitors, thereby 

rendering it a more attractive trading 

venue. Moreover, this new functionality 

is optional for participants to employ. 

Meanwhile, the other proposed changes 

to Rule 3301B(l) will render the Trade 

Now Order Attribute more efficient and 

easier for participants to utilize. The 

proposed conforming changes to the 

Midpoint Peg Post-Only Order Type, at 

Rule 3301A, will merely accommodate 

the adoption of Midpoint Trade Now 

functionality. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A) of the Act 29 and Rule 19b– 

4(f)(6) thereunder.30

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

Phlx–2021–40 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2021–40. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 86, No. 135 / Monday, July 19, 2021 / Notices 38151 

31 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3A ‘‘Market Maker’’ means a Streaming Quote 

Trader or a Remote Streaming Quote Trader who 

enters quotations for his own account electronically 

into the System. See Options 1, Section 1(b)(28). A 

‘‘Streaming Quote Trader’’ or ‘‘SQT’’ means a 

Market Maker who has received permission from 

the Exchange to generate and submit option 

quotations electronically in options to which such 

SQT is assigned. An SQT may only submit such 

quotations while such SQT is physically present on 

the trading floor of the Exchange. An SQT may only 

submit quotes in classes of options in which the 

SQT is assigned. See Options 1, Section 1(b)(54). A 

‘‘Remote Streaming Quote Trader’’ or ‘‘RSQT’’ 

means a Market Maker that is a member affiliated 

with an Remote Streaming Quote Trader 

Organization with no physical trading floor 

presence who has received permission from the 

Exchange to generate and submit option quotations 

electronically in options to which such RSQT has 

been assigned. A qualified RSQT may function as 

a Remote Lead Market Maker upon Exchange 

approval. An RSQT is also known as a Remote 

Market Maker (‘‘RMM’’) pursuant to Options 2, 

Section 11. A Remote Streaming Quote 

Organization (‘‘RSQTO’’) or Remote Market Maker 

Organization (‘‘RMO’’) are Exchange member 

organizations that have qualified pursuant to 

Options 2, Section 1. See Options 1, Section 

1(b)(49). 

4A ‘‘Lead Market Maker’’ means a member who 

is registered as an options Lead Market Maker 

pursuant to Options 2, Section 12(a). A Lead Market 

Maker includes a Remote Lead Market Maker which 

is defined as a Lead Market Maker in one or more 

classes that does not have a physical presence on 

an Exchange’s trading floor and is approved by the 

Exchange pursuant to Options 2, Section 11. See 

Options 1, Section 1(b)(27). 

5See Options 2, Section 5(c). 

6Options 2, Section 4(c) describes the required 

bid/ask differentials. 

7The term ‘‘member organization’’ means a 

corporation, partnership (general or limited), 

limited liability partnership, limited liability 

company, business trust or similar organization, 

transacting business as a broker or a dealer in 

securities and which has the status of a member 

organization by virtue of (i) admission to 

membership given to it by the Membership 

Department pursuant to the provisions of General 

3, Sections 5 and 10 or the By-Laws or (ii) the 

transitional rules adopted by the Exchange pursuant 

to Section 6–4 of the By-Laws. References herein to 

officer or partner, when used in the context of a 

member organization, shall include any person 

holding a similar position in any organization other 

than a corporation or partnership that has the status 

of a member organization. See General 1, Section 

1(17). 

8Options 2, Section 5(c)(2)(A). 

9An adjusted option series is defined as an option 

series wherein one option contract in the series 

represents the delivery of other than 100 shares of 

underlying stock or Exchange-Traded Fund Shares 

(‘‘Adjusted Options Series’’). See Options 2, Section 

5(c)(2)(A)(i). 

10Options 2, Section 5(c)(2)(A). 

11Options 2, Section 5(c)(2)(B). 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–Phlx–2021–40, and should 

be submitted on or before August 9, 

2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.31

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–15186 Filed 7–16–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92393; File No. SR–Phlx– 

2021–38] 

Self-Regulatory Organizations; Nasdaq 

PHLX LLC; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Options 2, 

Section 5, Electronic Market Maker 

Obligations and Quoting Requirements 

July 13, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 30, 

2021, Nasdaq PHLX LLC (‘‘Phlx’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Options 2, Section 5, Electronic Market 

Maker Obligations and Quoting 

Requirements. 

The text of the proposed rule change 

is available on the Exchange’s website at 

https://listingcenter.nasdaq.com/ 

rulebook/phlx/rules, at the principal 

office of the Exchange, and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend 

Phlx Rules at Options 2, Section 5, 

Electronic Market Maker Obligations 

and Quoting Requirements. Currently, 

the Exchange requires Market Makers 3

and Lead Maker Makers 4 to enter bids 

and offers for the options to which they 

are registered, except in an assigned 

options series listed intra-day on the 

Exchange.5 Quotations must meet the 

legal quote width requirements 

specified in Options 2, Section 4(c).6 On 

a daily basis, an electronic Market 

Maker must make markets consistent 

with the applicable quoting 

requirements. Market Makers (SQTs and 

RSQTs) associated with the same 

member organization 7 are collectively 

required to provide two-sided 

quotations in 60% of the cumulative 

number of seconds, or such higher 

percentage as Phlx may announce in 

advance, for which that member 

organization’s assigned options series 

are open for trading.8 Notwithstanding 

the foregoing, a member organization is 

not required to make two-sided markets 

pursuant to Options 2, Section 5(c)(2) in 

any Quarterly Option Series, any 

adjusted option series,9 and any option 

series with an expiration of nine months 

or greater.10 Lead Market Makers 

(including Remote Lead Market 

Makers), associated with the same 

member organization, are collectively 

required to provide two-sided 

quotations in 90% of the cumulative 

number of seconds, or such higher 

percentage as Phlx may announce in 

advance, for which that member 

organization’s assigned options series 

are open for trading. Lead Market 

Makers are required to make two-sided 

markets pursuant to Options 2, Section 

5 in any Quarterly Option Series, any 

Adjusted Option Series, and any option 

series with an expiration of nine months 

or greater.11 Finally, a Directed SQT or 


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